>> good morning, everyone. welcome to "squawk box" here on cnbc. i'm becky quick reporting live from new york today where we are attending the 22nd annual barron investment conference. it's taking place at the metropolitan on opera house. how often do you get to see you have live at the metropolitan opera house. our guest host today, ron barren. we have a lot to talk about with him. ron, thank you so much for being here today. >> thank you, becky. >> we will get to all of that in just a moment. but first, joe and andrew are back at cnbc headquarters. republican old wolf will join us from the weather channel with the latest in just a moment, but andrew, back over to. >> thank you, becky. on the market, the october jobs report. the release due at 8:30 a.m. eastern time.

the reports polled saying the economy likely added 120,000 jobs last month. that's the estimate and the baseline to play against. the employment rate is seen ticking higher to 7.4% and the numbers expected to show the government shutdown delayed hiring and forced some workers, of course, to stay home. also in the news this morning, blackberry will be paying its new interim ceo a base salary of a million bucks, a bonesup up to twice that amount and stock awards potentially worth some $58 million. john chen is credited with turning around sybase in the late 1990s. his shares only begin to vest after three years with the company. and the majority of those will vest an he completes his fifth year with the company. if he's fired without cause, he will be paid up to $6 million. and given that becky still has her blackberry, i think that's a good incentive to keep hers on for a while. salix pharma will buy

santarus for the $2.6 million. joe, over to you, sir. let's start with twitter. the first day of trading on the nyse drove the company's market value to around $25 billion. forget what the multiples of revenue is. i think it's like 50 or something. the stock closed at 44.90 after hitting a session high of $50, nearly doubled the ipo price of $26. and we're obviously going to talk about this today. it was very orderly. beautifully done. commend near hour in the new york stock exchange. here's my problem. the big guys, once again, got all the profits. the institutions. it's weird how facebook, you would have thought, worked better for the little guy, except the little guy was able to buy on the opening, then it went down and they got screwed. >> right. >> in this case, the little guy was not able to get in until it already opened at 45.

so all that move from 26 to 45 -- >> they didn't get to capture it. >> if it had opened at 30 and the public could have gotten in at 30 and then they could have participated. so once again, the rich guys, the little guy didn't make any of these profits. in facebook, only the little guys that held on -- >> can i -- >> what would the other side be? >> the other side would be that the big guys really are representing the little guys. >> because they're in mutual funds and stuff like that. >> that's the business. that's the business. >> but a lot of it is hedge fund and there's -- the little guy is not really is -- is not qualified to be in most of the hedge funds. >> but the hedge fund money is coming from institutions and the institutions -- individuals. >> i never thought i'd see you as a trickle down guy. but here you are. >> here it is. >> this is your version of trickle down. >> i'm trying. i'm trying. >> otherwise, we would have nothing to debate this morning. >> what's interesting is that the market sold off because -- and we have the discussion yesterday if this is really

frothy. i wanted it to be frothy because it's been a while since cab drivers were talking about the stock market and people were excited about making money in the stock market. >> unfortunately, i don't think too many cab drivers were talking about this. i wish they were. >> right. but it did get frothy and combined with the fed and people talking about that this was all pushed up by an accommodative fed around the world, the market ended up high. the ecb cut rates yesterday, the fed is still moving and the market closed down 150 after twitter priced. people do start saying, wow, there are some toppy things happening here. maybe they take a little bit off. when is the last time we had our 10%er? >> we haven't. and i need to do some more work on this. >> there were two public funds that owned private shares of twitter and they actually went down yesterday. >> that's weird, too. >> weird, too. >> and watching the other ones that were totally overheated, they went down, as well.

disney, i don't know, do we really care about a small company that barely does anything any more? no. disney is pretty important. >> yeah. >> disney, old media. an awesome company. very well managed. posting better than expected results after the close. the nebs were held by higher visitor spending at theme parks, increased consumer product sales and monsters university, its summer hit. ceo bob iger on cnbc yesterday talked about the results in delivering some good news for star wars fans. the new star wars film will be released on december 18th, 2015. i thought that was later than normal. no? i read something in -- >> i think that was later than normal. >> yeah. disney said it would delay the new star wars release. i don't know whether that's good news. in other stocks to watch, groupon earnings beat analyst estimates. strong growth in north america helped offset a decline in international revenue. let's check on the markets this morning.

it's their turn, probably. no, they're up, good. they don't need to follow wa we did yesterday, hopefully. actually, those are our markets. we'll see whether europe -- i would imagine they were down, but we're going to get back a little of it today. oil, hoping that it off set some the of the headwinds with the consumer this christmas season, the ten-year has been back at 2.55 or so today, 2.61%. the dollar got a lot of help yesterday from draghi, but the euro has improved from where it was. finally, gold down somewhere around 1300 or so. 1308, not doing much today. time for the global markets report. ross westgate standing by in london. and, you know, with all the discussion about twitter, some of it is trying to figure out how we monetize the international, how the company here monetizes the international reach of twitter. because it's a social if

phenomenon. have you tweeted today, ross? >> i have yet to tweet all the great things that we've been talking about today. i've been reading tweets a lot. >> okay. >> it's a -- i mean, the thing is, joe, for us in the news, i think twitter is a fantastic resource. it's great for research. and, you know, there's a lot of on people, of course, that don't tweet who just read tweets, as well. there's that question mark, how much can you do commercial activity on it before you sort of put people off the service? we'll find that out. >> ross, i'm with you. i wouldn't join a club that would have me as a member and i'm not interested in reading anything i have to say. and i can't imagine anyone -- so i don't want to -- and i'm also scared that one of these days the slightest thing in this world today, i mean, if you don't consider every anlel gle what you say and who you might

ruffle some feathers, they will put it somewhere. it's really dangerous. so i'm just using it as a news source at this point. i don't -- i may retweet, but then i have plausible deniability on that. >> yeah. absolutely. and, actually, we're in the news business, you use twitter purely for doing, you know, the sort of stuff we discussed on air, anyway. you know, i don't think anybody really cares what i'm doing socially. at least i hope not. in fact, i don't want to talk about it. >> no, because it would be hard to explain, number one, and number two, it's probably pretty boring. i was right about the red, wasn't i? >> exactly. the boar coredome factor is key. we are down in european trade, around about 7 to 2 decliners outpacing advancers at the moment. the ftse yesterday was down about 44 points. quite a wild session we had

during thursday's trade. the ecb surprised us all with that rate cut bringing the re-phi down. they narrowed the cord door as well as deposit rates. at that point, stocks rallied. then in the afternoon session, the u.s. open and we got that print of gdp number. the u.s. stocks went down, it brought us down, the ftse 100 off 44 points. right now, down 28 points this morning. xetra dax off 0.6%. really, in france, the s&p has come out and downgraded the country to aa from aa plus, really cite ago lack of progress in reforms. it was a shock. now, as a result, french debt did fall off in price. yields went a little bit higher this morning. particularly at the short end. we saw a move up in yields. but the key point is that s&p putting this rating outlook on stable and some ways market viewers could take the view okay, we're stable.

but as you might expect, the french president coming out and saying this isn't justified. although i think most analysts would believe that it was. now, we had a volatile eu euro/dollar session, as well. yesterday it was down to 1.3295. we saw that s&p downgrade put more pressure on it this morning. but ahead of the jobs report, we've got back up to 1.3426. but you've got to remember just two weeks ago, we were at a two-year high for euro/dollar at 1.3833. so down to to below 1.33. quite a big move in a short period of time. the volatility in this ross rate in particular set to continue. that's where we stand right now. back to you. >> thank you, ross. appreciate that. we are now going to get back to lincoln center in the middle of new york city where becky is with ron barren this morning. good morning, beck. >> good morning, andrew. joining us this morning is ron barron, the chairman and ceo of barron capital. he's the fund manager of the

four star barron growth fund. ron, it is a pleasure to be here this morning. thank you for having us here. >> thank you for inviting me. >> we love coming to this conference. we love checking in with you. and over the last four or five years, i was trying to go back and set the date. but i think it was just over four years ago. maybe you had been saying it before. but i remember vividly, you saying that this was going to be one of the best opportunities to buy stocks si s since you began career back in the '70s. that you were looking at things at generational lows for stocks. and you've been right this entire time. you're a value guy, though, and it start to wonder when you look at the markets after these incredible highs, is it a lot tougher to find value out there today? >> growth value rices. is it tougher? it's always not easy to find things, but when you're looking around and you have a certain process that you use and you're trying to find businesses that have competitive advantages and have great management teams and

big growth opportunities, they're everywhere. we were talk before, we have companies coming to our conference this year making presentations and they're five businesses and there are varied industries. colstar, fairfax, all sorts of businesses and we've invested $619 million over six years ago on average. those businesses have appreciated about $1 billion. i think in the next five years, those companies will make another $1.5 billion. so everywhere you look, there's companies, we were talking before that people who started businesses become worth billions and billions of dollars. this country is incredible that those sort of things happen in national gaming. he was telling me last night about how when he started, he found the idea about racetracks. they were unprofitable in pennsylvania. and he realized that there were people who come there who were gaming and customers were dying. no one was consolidating

racetracks. he was. so he went from a small marginally profitable business to $6 billion over -- since 1994. met him in 1994. we began to invest in him when we got an offer to buy his company for $7 billion or $8 billion. when the mccrashed, we got to buy the stock at great prices. everywhere you look, people have created businesses out of thin air, worth billions and billions of dollars because they had a vision and have been able to follow it and this country allows you to do that. >> did you change your investing style during -- just after the market crash when things got a whole lot cheaper? did you deploy more capital or was it the same way you were looking at things, just looking for growth opportunities at value prices? >> well, we're always trying to find businesses that have these big opportunities to become much larger. we're not playing the market. i think it's very difficult to determine when the market is high, when it's low. right now, it just happens to be at a good price and it was an extraordinary price five or six

years ago. but what we're trying to do is just find businesses and once we find them, they have these opportunities in developing as we expect, then hang on. so most people buy and sell all the time. the average mutual fund, the average hedge fund is trying to just make a little bit of money every day to constantly move ahead. they're not really looking out five or ten years. that's our perspective. baron growth funds, the average holding period there is nine years. the average holding for a average mutual fund is seven months. so when you have a different perspective, you're asking for different sorts of information. everyone else is focussing on what is the next quarter going to be? what is the stock market going to do? what's the federal reserve going to taper about? all we're trying to do is find businesses and it just happens in the environment right now is very benign and people are very afraid because of what happened before. they think it could happen again. so as a result of that, they've

pulled back. but the reason it happened -- should i go on? >> yeah, yeah, please do. >> so the reason it happened was in 1999, the stock market was selling for 33 times earnings. it's now 14 times or 14 1/2. so it's 33 times. and in that period of time from '99 to now, companies earnings have about doubled and the stock market is up 20% or 30%. from 2007, it's up maybe 10%. if people say how much it's up, it's only up from where it crashed and now it's 10% higher than it was in 2007. >> so you really don't think things are getting frothy at this point. that's what some people are concerned about, you're right, it's up 10% from where it crashed, but we have seen a rapid rise from the bottom. >> yes. you have a rapid rise because people are not indebted to you, they're losing money every day. one known you have is the value of your money is going to fall continuously. it's always going down. and every single currency that's

ever existed has defaulted or devalued or died, every single one, including the dollar. i was looking this morning on the news when i was working out and they were just talking about obama proposing to raise the minimum wage to $10. when i was 14 and working papers for the first time as a caddie, it was 80 cents. now it's $10. so everything ten times in 50 years. >> there were some people who look at the market and say, look, the only reason it's risen this far is because of artificial inducement from the fed, because pe is out there, because they're buying $85 billion a month. that's the reason stocks look so attractive. you're making an argument that they're cheap based on stock val you autoati val valuations alone. >> what the federal government is doing is they're trying to keep interest rates below the rate of intlagz. and when you do that, then you deleverage. you make your money up. so, for example, everyone is now talking about growth of the economy. what are they saying?

2%. >> 2%, right. >> and would you be surprised to know that this year it's 6.8%? >> although bullard -- 6.8% inflation? >> 6.8. the gdp is this year going to be 16.8 trillion. there's your 15.7 at 6.5, 6.6, 6.7, pretty surprising. the reason for that big difference is inflation. 2% inflation? i don't understand that. inflation is about -- maybe the cost of your computer has gone down or the cost of chips has do gone down, but look at the price of your house. the government has to make debt worth less. we're paying a lot less. we have more debt and we're paying less to carry it than before. >> let me ask you this very quickly, because we have pore time on this later. but if the fed were to begin tapering, there are a lot of people who think the market would react sharp to that. stocks are only worth what everybody thinks they're worth.

do you think if the fed pulls back, it begins tapering and eventually raises rates, how is that going to impact the market? >> the federal reserve is obviously going to some day stop doing it. i can it's not even necessarily obvious that they will, but i presume that they will. the rates are so far below where they normally are. you're now in a situation where the economy has too much leverage and they have to make it worth less and they have to make it affordable. if interest rates are where they normally are, interest costs would be twice as high as they were in our gdp. as a result, that would be a big penalty to growth in the economy. you have to get people to work. you have to give them jobs. and you have to be able to create jobs. so what you're doing when you're investing in these kind of companies with people with vision, companies that this whole conference is about vision. the idea behind it is when you're investing in companies, those are people creating jobs. >> we're going to continue this conversation. we're fortunately enough to be here with ron throughout the morning. right now, andrew, i'll send it back over to you. >> thank you, becky. one more of today's top

stories that we're focusing on, a super typhoon is slamming into the philippines. reynolds wolf joins us with more on that. >> good morning, guys. we are watching this massive system. it is the most powerful storm that we have on the planet. winds of 165 miles per hour. pressure, again, very low. at this time, the movement is moving to the west at 25 miles per hour. that's pretty quick for a tropical system. now, there's a couple reasons why it has begun to weaken over the last several hours. that's basically because of two things. one, the center moved over on land, which kept it away from its primary power source, that being the warm water. the second thing is you have some pretty high elevation with some of the mountains into the philippines and that disrupts that circulation. so if you're away from the power source, you tend to weaken a little bit and that's going to be the situation with this particular storm. now, it is going to weaken, but not dramatically so. only to a category four with winds of 150 miles per hour.

note the time frame, too. that's going to be early saturday morning. then it continues more of the west-northwesterly track, making landfall, a second landfall in vietnam with a category two winds, winds of 100 miles per hour. by time we get to tuesday of next week, winds at 25. even though the winds are going to die down, you still have a lot of threats with this. one of the big tlepts you're going to have is this is going to be a massive rainmaker. and when you get into the higher elevations of parts of the highlands of vietnam, back into laous and even into thailand and cambod cambodia, we're talking about heavy rain. same story here in parts of southeast asia. and with that, you get the mudslides, the flooding, obviously, all kinds of problems compliments of this massive system. back to you. >> thanks, reynolds. there was a chance when it was swirling at a 170, 175 that it was going be. now it's just the strongest of the year, i guess, because it

was fast moving, so it slowed down a little bit. i know there was one in the philippines in the mid '90s that was 175, 180 that killed, unfortunately, over 1,000 people. they've done a lot to try to protect people in the philippines, too, so hopefully that will work, right? let's hope so. they seem to be much better prepared this time. i spoeg spoke with a missionary early this morning and he was there from start to finish and they're still dealing with the aftermath, as you can imagine. and he said that he thinks they were pretty well prepared. it's early, though. there is so much more information that's going to come out. who knows how this story is going to end up. >> and they get 20 a year apparently of these typhoons. it's like almost a magnet in the philippines. one thing to put into perspective, do you remember camille, reynolds? >> yes, i do, indeed. >> 195 on the winds there. so people -- and that was 1969. so this was huge. 165, 16 0. but it's not, obviously,

unprecedented. and then the on her thing is how long have we had accurate measurement in that area of the world? a couple of decades, only, for measuring typhoons. >> absolutely. you're absolutely right about that. and you nailed it when you talked about the philippines having so many of these. this is your atmosphere's punching bag. but this one, certainly one that they will always remember. >> yes. okay. thanks, reynolds. see you later. >> have a good weekend. >> cold, ugly day yesterday. better today. going to be sunny in this part of the world. >> it was nasty yesterday. >> yeah, it was. it's like one of those rain and 40 degrees is just -- >> not happy. >> you know what you need? you need a uv light to get under. otherwise, you can get s-a-d, right? and i'm not spelling sad. it's seasonalal affective -- >> how about one of those lights? >> becauselty of these stories you report on makes you sad. >> no.

philips makes a blue light. i figured when i first started doing this job, because of the early mornings -- >> you bought one? to improve your mood? >> i thought maybe it would wake me up. i did. this is about a year or two ago i started doing it in the morning just while i was reading papers. >> and since you came in, you look like the tan lady or boehner when you got in here. >> no, it's just a little blue light thing. tim harris recommended it in one of his -- >> my rants will not be able to go on for very long. coming up, why mark faber warnings wee warnings, we're in a worse position than 2008. i couldn't watch the world series because it was too late. now the best college came on thursday night, stanford versus oregon. i love stanford. they're so smart and they're so good. great coach. they beat these guys. and then, the other big game, baylor was undefeated.

they killed oklahoma. the two four top teams play on a thursday night. there's nothing on saturday. >> espn gets to tell the ncaa when the games are played. that makes me mad. what i said about iger and disney, i take it back. because they're really ruining disney. but, good, i'm glad the redskins won. the nfl thirst night, the minnesota vikings -- they rallied. you just told me the redskins won. vikings won. anyway, good for minnesota. i wanted redskins to win. anyway, rallied, they outscored the redskins 20-2 in the second half. rallied for their second victory in the year. adrian peterson, harwood, he's going to be sad with me. i can commiserate with him.

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time now for the executive edge. it's our daily segment focused on giving business leaders a leg up. the first story, mark faber he's warning the global financial markets are in a worse position, he says, than in 2008. faber on cnbc's asia "squawk box" today. >> i'm telling you, we have the credit crisis in 2008. because there was too much credit as a percent of the economy. then today, there's that much more credit as a percent of the economy.

china, for instance, keeps credit as a percent of the economy has increased by 50% in the last 4 1/2 years. this is the fastest credit growth you can imagine in the whole of asia. >> guys, if he's right, we have big problems here. but he's been sounding this alarm for some time. what do us, beck and joe? >> we were just talking about this, ron and i, and ron has some thoughts about this. just the whole idea of thinking we're in a worse position than back in 2008. what do you think? >> i think it always sundays smarter to be bearish than bullish. i think that the economy, there's plenty of credit around, there's plenty of opportunities to borrow some banks, the banks are very solid financially now, better than they have been in a long time. and you're able to find businesses that have big growth opportunities. i bet you that if you look at faber's record, you're going to find that he hasn't made very much money by being able to predict what the market is going to do and you either -- what we

do is just try to find businesses to invest in. i think we try to figure out what the market is going to do, we're not going to make money. >> ron, when i heard this, i think of 2008 and it was the private sector was totally overleveraged. now it's like all of that has been put on the public sectors around the world. but they have the ability to print, right? i mean, i guess you could see a problem down the road in terms of currencies going down, but isn't public sector leverage that -- that could be handled easier than private sector leverage? >> the public sector leverage can definitely be handled easier than private sector leverage if the government has the ability to print money. the governments are in europe and they don't have the ability to print money, then it's more of a problem. but in the united states, you can. >> by the way, you said to me the smartest thing i've heard on this program frankly in a long time, which is that it always sounds smarter to be bearish than bullish. >> no wsh i -- >> lloyd flank fine said one

time it's never popular to be an optimist. is it that it's never popular or just not popular now? >> that's a well known fact. you will always keep a job if you're bearish. but if you're bullish, you just look stupid. i don't know why that is. it's part of the media, i think the house is not burning. you can do a lot better in this world if you're bearish. he's absolutely right. but look who has made all the money, baron, who has been bullish. >> that's true. we are going to talk about students, u.s. students have made slight progress on national math and reading tests this year. the bad news is that proficiency rates remain below 50%. politicians, of course, worried about keeping american students on level footing with their international fears. what do you guys make of this story? good on one side or -- >> no. i thought what was really interesting is there were a couple of places where there was massive growth. i think it was tennessee where they saw 23% increases and

washington, d.c. where they saw 22% or maybe it reverses. so t22% and 23%. washington, d.c. has some massive changes and that's probably what has helped them. >> carl icahn is a big sponsor and a lot of people i know of charter schools. and i know the test results they get in those schools are fantastic. and the results they're achieving and kids are lined up to try to get in and too bad our new mayor doesn't like them and is trying to close them down. >> in terms of charter schools and where you think those are places they're really seeing gains. >> yeah. well, if you're paying people on the basis of how they perform, that is a good thing, i believe. >> that was one of the most continue vashl parts of what happened in washington, d.c. what they've done there is instituted changes where they've gone after teachers. if you are one of the better teachers, they reward you for that better performance. if you're in the middle, they try and help you along. if you're at the bottom, they

move you out. >> we talked about this a long time ago and we said your mom was a teacher and when you were young, when she was young, that it was all she could do. women were instructed to become teachers. >> right. you could either be a nurse or a teacher. my grandmother was a nurse and my mother was a teacher. >> and now women can do everything. so great women gets jobs like you do and women who can't do as well as that -- >> although i know a lot of great teachers who are still out there. our girls have some great teachers. >> not as many as there should be. >> guys, what do you think? >> i was moving on to the next one for some reason because i -- i don't know how i feel about the transfat thing, becky. but who is going to read it, is that andrew's thing? >> i was told we're supposed to go to a break. but let's talk briefly about transfat. >> i read the things you're not going to be able to get. marie calendar pies, popcorn. >> coffee creamer, too.

>> frozen coffee creamer. i don't know. banning? banning. >> i think i'm okay with this. >> i know. i know you are. >> a lot of big companies started -- >> from pillsbury. >> a lot of big companies started getting rid of it years ago. >> one of the most famous cascades of scientific dog ma that was totally reversed whack back in the '80s with red meat and heart disease. that was totally -- further studies showed that -- i'm glad we didn't ban red meat back then. cholesterol and heart disease, if i eat one pillsbury cinnamon rule and that's what i want to do per you're, i'd like to be able to do it. >> it's artificial transfats. >> right. you don't want anything artificial any more? then no preserveses for you. you can eat rotting food every day, andrew. >> thank you. during the next break, i'm going to go to a break, i'm going to have that yogurt which becky

likes to call -- what do you like to call it? >> cultured nastiness. i like yogurt, too. >> coming up, two of the portfolio managers behind ron baron's success, we're going to talk techs buying twitter on day one and real estate and a lot more when "squawk box" returns after this. [ male announcer ] at optionsxpress, our clients really appreciate our powerful,

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baron investment conference today at the oprah house in lincoln center. joining us this morning is michael livert. by the way, he just bought 200,000 shares of twitter on its opening day. we're going to talk to him about that. also, we're joined by jeff colich from the baron real estate fund. his real estate fund has been ranked by both lipper and morning star. it's the fastest growing baron fund this year. thanks for being here. >> thank you for having us. >> so i have to ask you about twitter. you've got 200,000 shares of this, mike. what happened? wa did you think of it? what do you think now? first of all, what price did you get it at? >> we got it at the ipo price and thought it was very attractive. >> adds at 26, not 45. >> correct. there are very few platform companies out there and twitter is up there with facebook and linkedin and google. you think about the size of the internet advertising market. that's just to mobile and twitter's opportunity to capture

their fair share of that, you can still get to a much, much bigger company than it is today. that's going to be extremely profitable. facebook is a 60% margin business. twitter will be at that level before. >> would you have bought it if you were getting the price of 45 which is where most retail investors were looking at it? >> i think that would have been a much tougher call. we're long-term oriented. the first day trading doesn't phase us that much. i don't know whether the stock will go up or it will go down. but wa i'm focused on is where it's going to be in five years. people never understood how good the opportunity was going to be. that's wa you have to think about. >> those are the stocks you like, too? facebook, if you look through the line, twitter, is it a similar company, you think? >> it's a similar company because it's gon going to monetize through advertising. it's similar in the dimensions. but facebook is about connecting with your friends, looking at pictures of kids. twitter is about information and

content. it's every magazine, every newspaper, every tv show. anything that you're interested in, you can get on twitter. so it's content large. >> why don't we talk a little bit about what you see in real estate, jeff. and i know your fund has groan rapidly. part of that is the growth from what you've been investing in. a lot of it is from people wanting to get into that fund, too, and the additional money coming in. why do you think real estate is such a bigger draw than maybe it used to be? >> well, we're optimistic about the asset classes of real estate. our firm has a very long history of investing in the asset class of real estate. we've done so since our inception 30 years ago. and we've invested billions of dollars into the asset class of real estate. as we assess the landscape right now, it's our view that the key ingredients are in place for this asset class to perform well. what am i referring to? number one, demand conditions are improving across all categories of real estate, both xhurps commercial and residential. number two, construction activity is very much under control right now. in fact, it's collapsed on the

commercial side and it corrected meaningfully on the residential side, as well. number three, credit conditions are beginning to mend and number four, interest rates remain quite favorable. so when you put that into the mix, demand improvement in construction activity, credit mending and low rates, it's a very, very good formula for the asset class. >> i want to point out that since the fund's inception on december 31st, 2009, it's had a cumulative return of over 7%, which is phenomenal. we've had low interest rates, but we have seen a spike relatively speaking, over the last six months or on so. and i just wonder if interest rates rise, what do you think that does? how does that change your investment strategy? >> sure. well, at baron, to be clear, we don't predict interest rates. we pick stocks. having said that, i think it's a fair assumption to assume that the direction of monetary policy over the next year may be one where perhaps interest rates increase reflecting an improvement in the economy.

so the extent that that occurs, real estate can perform quite well in a rising rate environment so long as it's reflecting an improvement in the economy. now, our type of strategy is a differentiated type of strategy. we've always pursued a nontraditional approach to asset classes. >> right. it's a much broader look at real estate. >> 99% of real estate funds focus and isolate their investments on one category and that's reits. that's never been the approach we've pursued at baron. we invest in very interesting hotel c-corp.s, such as hyatt and starwood, leading commercial real estate insurance firms, we're focused on the developments in the residential side of real estate, the home builders and land developers and senior housing operators and building product companies. so it's a more expansive view, an approach to real estate which gives us a better opportunity to perform well to the extent that rates do increase. >> i would make a comment, also,

that reits are value in general at 15 to 20 times. c-corp.s are valued at 7 times. you can take a c-corp. anytime you want and convert it into a reit. so we're buying real estate that you would ordinarily buy in other reits at a discount and the reit companies, in order to grow, have to raise capital all the time. our guys are generating capital from our own business and it can convert to reits and that's why you get the pop. first of all, he's a brilliant guy, as is he, but that was the concept behind our fund. it's not a normal reit fund. and it is reit fund are up 17% and i think jeff is up 21% or 22%. >> mike and jeff, we'll see you soon. ron will be with us for the rest of the morning. still to come on "squawk box," we have the chairman of pen national gaming. that's the company that ron baron has helped for five years

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welcome back to "squawk box." check out the cover of "usa today" billy graham celebrating his 97th birthday. i said who's that lovely lady? is that milania? and it is. milani trump. >> donald trump's wife. >> donald was there. and i'm thinking all these people only need one name. milania, donald, greta. and kathie lee. >> who has two names. >> you're right, but it sounds like one name. he's mentally alert, but obviously at 95, physically frail. he gave a video, a little bit of

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at the baron conference. and a company that makes big bets on gambling. peter carlino is the chairman and the ceo of the recently spun off gaming and leisure properties. peter, thank you so much for being here. >> i'm delighted to be here, becky. >> ron started telling me a story about what you did with this company. why don't you tell our viewers why you got so interested. 1994. >> i've been interested in gaming since 1994. and when he'd gone public and was raising money, somehow i missed investing with it and the stock went up many times. he had this idea behind racetracks that weren't very profitable, they were losing their customers and he had the idea you can consolidate up these racetracks and put gaming into them and make a lot of money. >> slot machines or something into them.

>> off track. >> he declined to invest at that time. and missed the first wave. but, yeah, essentially that's true. i've been in the racing business for many, many years. business and industry going nowhere. there's no new customer base and as i like to say, how many of us have our 18-year-old come in on a friday night and say, mom, dad, i'm going off to the racetrack. those days are gone. so it was the recognition there's gambling going on in this place. i always thought it was a sport. but it is a sport that involves gambling. and there was this other world of gaming out there and we needed to explore it and that's essentially how it started. >> ron, you pointed out, how much has the stock gone up since? >> well, went from $100 million, $200 million, went to $6 billion. then when the market crashed and went down to $2 billion or $3 billion, that's when we bought our stock and now back to $6 billion again. >> we started at our ipo, raised

all of $16 million, sold 40% of the company, that was essentially a $40 million paper value of a company doing $38 billion in sales. we sold the company in 2007 to fortress and center bridge for $8.9 billion. >> wait a second, $40 million to $8.9 billion. when you're talking about being bearish on the stock market, this is what happens. you have a vision and you're able to execute. this is what happens. >> peter, why did you split the company? why this spinoff? part of it is focusing on the racetracks and the gaming you have. then the other part is the real estate. >> sure. >> it's an odd structure. >> essentially, becky, we've run the table. that is to say we're limited. we're in every major market in the united states outside of las vegas. where we just never been able to find a way value proposition. new jersey we've ignored because it's not worth being there at the moment. so we're everywhere else. we wanted ftc issues every time

we move to a new place, we can't go there because we have competing facilities. so for us, it opens up a whole new world. it can be a landlord, operator, we can do it all. and there are states, also, that have limited licenses. so you can have one, you can't have two. with a reit, we could have multiple licenses and that opened up a whole new world for us. >> you talked about what happened with the consumer kind of collapsing with the, you know, great recession. the economy collapsed a lot happened. where is the consumer right now in terms of what they're willing to do when it comes to gambling? >> i think they're kind of nowhere. the froth is off that industry. people are hurting. i don't know who feels good today about where things are. great uncertainty at every level. our customer base, which is essentially middle america. we're not bringing people in from macau or hong kong, coming from cities and towns all around us and the people most affected by what's going on in washington, the absence of new

jobs. there's a lot of talk, i hear it here in the mornings, about job creation but, remember, most of these jobs are part-time jobs. and companies are morphing full-time jobs and replacing them with part-timers. this is not a good thing for america. >> okay. >> peter, also, one more thing that, you know, it's not just in this industry, but you're doing better than everyone else as far as returning capital in this industry. the question last night about hollywood. and so what's special about the way you've been able to develop those properties and make them exciting so people want to spend more and so you make more on the dollar invested than anyone else. >> we have about ten seconds. >> frankly, it's a commitment to our mission in life, which is return on capital. we're investing our shareholder capital. we need to do it wisely and the goal is simply maximizing, not building edifices of monuments to ourselves, but generating the highest cash return on our investment. >> peter, thank you so much. we'll have more from ron baron and the baron conference. stick around. at farmers, we make you smarter about insurance.

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negotiator's back. >> target is in sight. >> priceline making management changes and announcing results after the bell. >> priceline is different now. >> we hear from the company's current ceo and the man who will succeed him in the job. talking hotel expansion and why he's buying africa's largest hotel chain. >> and we are live from the metropolitan opera house at lincoln center, the site of the baron investing conference. ron baron joins us with some of the names making him money as the second hour of "squawk box" begins right now.

>> i have saved the world in the movies, so naturally, there's folks who think i must know what to do. just because -- >> good morning and welcome back to "squawk box" right here on cnbc. >> william shatner. >> right there. >> yeah. >> this over here is joe kernan, becky quick this morning. in new york city covering the baron investment conference. she's at lincoln center and bringing us a lot of the great guests this hour. take a look at futures, thousand, see how things are setting themselves up after a very bizarre day. twitter up, but the rest of the world was down. this morning, however, things look up. up a little over five points and the nasdaq up close to 14 1/2 points. morning headlines for you, as well, it is a week late because of last month's government shutdown. but we're going to be getting the october jobs report coming up at 8:30 a.m. eastern time this morning. economist looking for nonfarm

job growth of 120,000 jobs. that is the number to score at home and unemployment rate of 7.4%. we should say that would be ticking up from september's 7.2% if the economists are correct, we will know that in an hour and a half. walt disney earned 77 cents per share for the fourth quarter. that's 1 cent above estimates. revenue came ahead of analyst forecast as customers spent more money at disney theme parks -- that's where a lot of this came from. and sales from disney consumer products also rose. here's the ceo talking about the mobile media. >> mobile platforms are another great way for us to move our content to consumers around the world. and we're seeing huge growth for espn, abc, disney, and all the products that they create on mobile platforms. and it's not only another way to monetize, but it's just another way to engage more with

consumers. >> and as joe was saying in the last hour, damn you, bob iger, because even though espn ratings are going up, it's because they're moving them to weekdays. normal people can watch, but those of us who go to sleep. >> i understand why they're doing it, it's prime time and there's so many games on saturday they all sort of run together. but the you put one on thursday night, makes sense for everybody except for us. >> it's no good for those in the morning -- in the morning tv business. nor those, by the way, who work on wall street who have to get to get to the trading floors early. also, this is the big story following it on day two. entering the second day as a public company, as a rising 73% of rising ipo price. ended thursday trading at $25 billion. first day trading on the new york stock exchange. it did go smoothly. in contrast to problems that plagued facebook's may ipo.

how does bob think about that? >> yep. let's get back -- >> niederauer. >> yep. yeah. if you like the rivalry between those two individuals, it's, you know, like -- >> did he call and congratulate him? >> i don't know. niederauer, you know he had a little bounce in his step yesterday. that's a good move. that's a good move. what does that do? i've got to start doing that. you're feeling good about yourself, you do that? >> but then if you do that -- >> yeah. you've practiced this or it's natural. it's actually natural. anyway, let's head to the metropolitan opera house at lincoln center. i think lincoln center, i think jazz, but there's an opera house. i know you can't whistle at all. >> la. >> and when you have a second for me to ask ron a question. i want to ask him one thing.

my only really question for him and it's a very general question. but when you are done, let me ask the question. will you? >> okay. we're going to ask one or two questions and i'll let you jump in. >> i only have one. >> all right. okay. >> how do i get dinner? >> he's already there. we're at the investment conference, this is where top management, a chance to kick the tires and ask questions about the companies and the portfolio managers that invest in them. ron baron is the chairman and ceo of baron capital group. and you told us in the last hour about how you still think the stock market is a good value at this point despite the run-up we've seen in all of this. we're going to get a jobs report in half an hour. less than half an hour, actually, and that number is not expected to be a good one. it's going to be influenced by the government shutdown. but you could be looking at unemployment jumping back to 7.5%. that's what some economists are looking for.

are you worried when you hear things like that? does that dim your optimism, dim your enthusiasm? >> no. >> why not? >> we were talking before off camera about how they have the new normal. the people who invest in bonds think there's a new normal. we're going to have very slow growth. there's an article in baron's that came out a week ago, two weeks ago wrote growth is slowing to a snail's pace. and it was based on the report, on the theorys of an economist robert gordon from wisconsin who says that, you know, growth in our country is over. we have 237 years in history and that's it, no more growth. and we're now to a snail's pace. so my belief, though, is that i think growth is really an accelerant. growth in our economy is this year, 6%, 6.75%, but growth in an economy, interest rates are very low, tremendous advances in

technology, it's the very beginning of health care. we're making enormous advances. at the time of jesus christ, the life expectancy was 32. in 1900, 2,000 years later, it was 42. it's now 80. and the projections are that in -- within the century, it'll be 125. 125 from 80. it's remarkable what's happening with the gene sequencing, genome sequencing. >> but it makes me think we all need a lot more money for retirement. >> you do. and that's why i got a good business. i've got to stay alive to benefit from all this. yes. so it's health care. and it's energy. revolution going on in energy. shale and gas where we found as much energy in the ground as we've taken out of the ground for the last 100 years, it's all in america. it makes it so we can't be subject any longer to extortion by unfriendly countries and can't do a 1970s oil embargo

anymore. and makes companies that made manufacturing overseas come back to america because the costs here will be very low compared to the rest of the world. we have $3.50 gas. oil's $90. >> joe, i know you must have your one question you were talking about before. did he pique your interest when he talked about 120 years old? >> now, yes. and i also, ron, i want to just add to what you just said. in addition to life expectancy being flat for so long, so was per capita income for 10,000 years it was $700 a year or something. then in 19th or 18th century, we got property rights and the ability to patent something. the ability to earn a profit and to be -- the capitalistic system came in and we went from $750 a year to $40,000 and 10 and 12 and 15.

it's been an explosion just like life expectancy. and it's, unfortunately it's been about capitalism. which, if you can believe it, has a bad name these days. but property rights and the ability to patent something allowed you to benefit from your own endeavors. >> i agree. >> the rest is history. my question to you is, i know about all your home runs. and they go up 1,000%. i want one. you're still looking, i know. and i wonder if you have one. and i don't want it to be something i don't understand in the cloud or where i need to write a bunch of code. or where i need some kind of -- i don't know, social media uuber something. is there anything low tech that's going to go up 1,000 or 2,000% that you've identified recently? >> we have 400 investments. the top 20, the top 10 represent 20% of our assets, the top 20

represent 30% of our assets. the reason they're so large is a percentage of our total, they've been successful investments. i think that of the other 380 investments we have, some of those investments are going to be as successful as the large investments that we have so far. which ones? i don't know. a lot of them. and when you're just going out and -- you meet someone like peter carlino and go, my god, i can't believe he was able to do that. you say, that's unbelievable. carlisle had $400 million under management when glenn joined the company and they had 30 employees. they now have, i don't know, 1,500 people working there, 2,000 people working there. and they have $180 billion. you know, this country, when you were talking about how there hadn't been much change in such a long time, well, you're right.

and this is the very beginning. so when i read all these comments about no growth, slow growth, new normal. i can't understand what they're looking at. >> ron, i'm going to send you the book about the singularity. if you plot progress in terms of huge advances, it's on arhythmic scale. and by 2040, what we'll be able to do will be mind boggling. while other people are worried about 3 inches of ocean rising, we are theoretically going to be live on a grid with cyber organs. it's incredible what is possible through technology in the next 25 years. >> what is your avatar going to look like? >> are you going to use your own? i kind of like the way you look. is that already taken? >> i'm using mine. i want to use mine when i was 27. >> you will be able to. you will be able to. i guess you've got to invest in

baron funds. since you don't know which ones are going to work. you can't tell me a name. i've got to buy something from baron funds, right? >> i like my funds. >> all right. >> honestly, though, that's where you put your money? >> i'm the largest investor in the mutual funds. >> he is putting his money there. >> and i still invest every month. >> every month? >> every month. up next, priceline sees its profits soar and names a new ceo. it's not william shatner, the company's current ceo and incoming ceo will join us after the break to talk about the travel business. also, speaking of travel, marriott buying one of africa's largest hotel chains as it looks to expand in that area. "squawk box" will be right back. when we made our commitment to the gulf, bp had two big goals:

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welcome back to "squawk box" this morning. announcing changes to its management structure. joining us now is jeffrey boy, the chairman, president, and ceo of priceline.com and the incoming president and ceo darren houston, currently the ceo of booking.com. thank you, guys, for joining us. >> great. >> let me start with this. sometimes when a ceo is

departing, that is considered a sell signal to the market. how do you reassure the world this morning that things are all on track? >> you know, i think if you look at the results we announced for the third quarter, very strong top line momentum and great margins, it's hard to say at least looking at the fundamentals of the business that our change in management should be a sell signal. and i think the fact that i'm staying around as chairman to work with darren to make sure we get a smooth transition for shareholders and the company should be reassuring, as well. >> there's going to be serious sucking up going on in this interview. he's unbelievable as an executive. >> absolutely. >> best you've ever seen? >> yeah, i thought so. >> how good are you? >> it's unbelievable. >> another management question, though, there is a school of thought that when you leave, you should really leave, right? you should get out of the way and there's another school of thought that says you need a transition, et cetera, et cetera. you've taken the transition

route. >> yeah. >> close your ears, how do you think about that with this guy hanging around? >> i think it's great. i've been with the groups for coupling of years. >> i tried. >> yeah, okay. >> what do you want to do? no, i think it's great. the other thing, you know, i -- i think a lot of what people don't know about priceline is 80% of our business is overseas. i run booking.com. i think it's a great partnership having somebody here, the headquarters being in norwalk and i live in europe. >> so let's talk about that. that is actually very -- booking.com is a huge component if not the biggest component of priceline. most people think of this as priceline.com. i said i use something called kayak. i live and die by kayak. i don't go to priceline, although you told me during the break also that ultimately you think i buy the ticket from

piecelin priceline. >> you'll be unhappy to know i usually go direct to the airline. is that okay? >> it's perfectly okay if you're using kayak to search for it. >> this stock has been on a run. i don't know if you get this stock up on the screen. it's an amazing thing when we started the show, we had -- what's the name of the song with shatner? >> the most famous one is "lucy in the sky." i don't know all of his songs, i know they're all just incredible. >> did he keep any stock? has he done okay in all of this? >> there's an urban legend that mr. shatner made $500 million or $600 million on priceline stock. that's not true. he was paid in equity in the early days of the business. but unfortunately sold it at a low price. but he's doing okay. >> how much did his hair own of the stock? how much did his hair make separately from him because they're totally different -- >> you'll have to ask him. >> okay.

all right. >> later today, we're going to get the employment or unemployment report at 8:30. but you guys are a great gauge of what's going on in the economy when it comes to the consumer. and i imagine some business spending. i don't know -- even when i book some stuff for business, i go on to kayak. what do you see going on right now? >> well, maybe i can start. just because i'm in europe. i think it does feel like things are stabilizing, particularly in southern europe. the north has a little bit of contagion if you look at what's going on in the netherlands and france, et cetera. it feels like things are flattening out, possibly improving. and we're seeing travel demand is very strong across the world, particularly in asia. we're seeing a lot of great outbound business into china. relatively optimistic, actually. >> and prices are going up on airlines, for example. >> it's a little different in different pockets. in europe, there's still a lot of depression in airline pricing, particularly because of all of the low-cost carriers in europe.

it's a bit of a mixed bag. still a lot of great deals out there for travel. but generally consumer demand is quite healthy. >> same thing on the hotel story. do you think the hotels and airlines are attracting each other? >> not necessarily. not necessarily. it depends on the dynamics. but generally with hotels, the daily rates they charge, almost in every country we look at are pretty steady. >> now, this is a selfish question. on your website, you have the ability to tell me whether i should buy now, whether i should hold, wait, or -- it's either buy or wait. and you put a percentage on whether you're going to be right or not. how right have you been on that? because i -- i look at it and think maybe it's wrong, i've been playing around. what's your sense? >> you know, those percentages are not right 100% of the time. they're right most of the time. but you can be -- you can be wrong. and typically if you're trying to book flights, you should book in advance because the prices

tend to go up as you get closer to the day departure. >> are you a fan or not of all the consolidation in the airline industry? amr, obviously, and u.s. air. that deal is in some form of limbo right now. what does it mean to your business? >> you know, ultimately, we might have a little bit of a contrary opinion about that. consolidation normally means reduced capacity and prices going up. but having been in this business as long as i have, the most important thing really is for the airlines to be able to make money and continue to provide good services and the consolidation really has been necessary to make that happen. >> and when you look at the price differential, though, at least in the united states, it appears that prices continue to go up at a rate that is clearly much, much higher than inflation. >> i think that's a function of the fact that if you look at the travel market in the united states, a little bit more healthy than what darren was representing he's seen in europe. we have had rising airfares,

rising average dale fares. >> are you going to do anything different? >> i think we're going to be staying the course, it seems to be working. >> good answer. he's still the boss. >> thank you. >> you can buy on amazon the best of leonard nimoy and william shatner on one album, actually. who can forget "lucy in the sky with diamonds" or the other one from leonard nimoy. "everybody's talking," do you remember that one? "put a little love in your heart." >> have you considered bringing him back as the spokesman. >> he's not now? >> who? >> he's still going? >> yes. >> i thought he's not doing it anymore. >> are you kidding? >> i thought he wasn't doing it. >> he is. >> i'm behind. >> you're a court cutter, aren't you?

>> i have cable. >> little later today. >> both sides now. isn't that joanie mitchell? i can't believe they butcher these songs. "ruby don't take your love to town." still to come from the baron's investment conference, it's the zillow for commercial real estate, talking about costar and it's one of baron's holdings. maybe going up 1,000%. find out why when we speak to ron baron and the ceo in a bit. and later the c.o.o. joins us. three big investment ideas and where they plan on putting money to work. [ male announcer ] this store knows how to handle a saturday crowd. ♪ [ male announcer ] the parking lot helps by letting us know who's coming. the carts keep everyone on the right track. the power tools introduce themselves. all the bits and bulbs keep themselves stocked.

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you couldn't do that? >> i could. >> you definitely could. all right. we are back. and one of the big stories today, big typhoon, a super typhoon they're calling it slamming into the philippines, hundreds of flights canceled, more than 100,000 people taking cover. sustained winds all the way up

to, i saw 170 miles an hour. super typhoon haiyan. it was less -- i don't know, it's kind of an old story that we had there. when it finally hit landfall, it had be moving so fast it fell to about 160, 165, still very high. the strongest of the year. >> that is the case. when "squawk box" returns, we're going to talk disney earnings, plus marriott buying 116 properties in africa as it looks to expand the empire. and check out the futures at this hour. we do have green arrows across the board with the dow looking like it would open up about eight points high, s&p 500 up about six points. nasdaq up close to 15 points. "squawk box" returns with that and a lot more in a moment. ♪ ♪

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welcome back to "squawk box" on this friday morning. wall street focused on the october jobs report coming out

at 8:30 a.m. eastern time. it's expected to be relatively weak. forecasts call for 120,000 new nonfarm jobs and an unemployment rate that's going to tick up to 7.4%, that would be up from september's 7.2%. at the same time, we're going to be getting personal income and spending numbers for september as with the jobs report, these numbers were delayed by the government shutdown. september personal income expected to post a rise of .3% with consumer spending up .2%. we'll see whether some of those numbers are right or wrong in just about an hour. and some takeover news this morning, drug maker santarus is buying salix. adds significantly to earnings in the first year. and that is a big premium this morning. for now, though, we are going to get back to becky quick who is at lincoln center in the heart of new york city. becky. >> andrew, thank you. we are continuing our coverage

of the baron investment conference. joining us right now is andy florence, he is president and ceo of costar group and our guest host ron baron. thanks for joining us this morning. >> thank you very much for having me. it's wonderful to be back here at lincoln center. >> it is great to be here. an interesting company. i've heard it described as a few different things. maybe as the zillow commercial real estate. why don't you tell us exactly what it is? >> i would say one of the best things about costar it's actually both a zillow of commercial real estate and bloomberg of commercial real estate. bloomberg is about really high-quality information on a huge asset class securities. zillow is about marketing real estate online. costar's actually doing both of those things. we help brokage firms market their properties to millions of people. we also help the biggest

institutions who invest billions into commercial real estate understand where those investments are going and where they should allocate their portfolios. >> i know you've been growing at a rapid clip that you are now outgrowing your headquarters. what accounts for that? why so much activity? is it the market that's out there? what's happening? >> this is a huge trend and change in the nature of real estate generally. you're seeing it in residential and commercial. these are information-intensive businesses, understanding what people's options are for leasing and funding buildings. and as we bring these different data sets online, multifamily real estate, office real estate, it's being picked up by our clients, it's very popular, demand for more, and we're growing into that opportunity. year-over-year, our earnings grew 50%, and it's just we added 10,000 new firms. >> it's also interesting, how do

you get the data? where does it come from? you were telling us before it came on camera the data being used before you was synthetic. were making it up. >> this is an industry, $50 trillion global asset class which unlike securities has historically had little or no information. and so when people are modelling the potential financial performance of a building, they often had to take numbers out of air and make it up. what we've done is we've invested about 10,000 man years and about 1,000 plus researchers, gone out and visited every building in the country. interviewed millions of people. gone out and visited basically every building in the country and make millions and millions of phone calls. actually document what's happening in real estate. and that is incredibly valuable for the industry. >> you say the office market is

only about half way through the recovery. why is that? >> well, demand is still soft. job number comes out at 120,000 jobs. that is a slow steady recovery. it's decent recovery. one of the things that sets against that is the fact there's no construction. we're at half of normal construction levels in the office industry right now so that tepid sort of job growth is actually okay. and buildings age. they depreciate. they become functionally obsolete. we're seeing office spate. a little bit of job growth. that's bring the vacancy rate down, we still have a ways to go. we're in the early recovery. with people chasing yields, with qe infinity. the sales side is a little different. people are maybe getting a little aid head of them market fundamentals. prices are actually recovering a

little faster than the fundamenta fundamentals. in particular, the multifamily industry is reaching precrash highs again. the highest prices we've ever seen in multifamily. that side of the market is white hot and maybe a little overheated. >> thank you very much for joining us this morning. >> of course. >> andrew, back to you. >> thank you, becky, for that. coming up later, expanding into africa. he will join us after the break to tell us all about it. plus, an hour away from the october jobs report. we've got predictions, the numbers, all ahead as "squawk" rolls on. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities.

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welcome back to "squawk box" this morning. checking futures after a tough day yesterday, besides twitter, that is. we do have green arrows this morning. dow looks like it would open up about 32 points higher. and the s&p 500 up close to -- a little over 4 1/2 points. joe? >> marriott hotels has announced a deal to require a -- it's a hospitality holding in cape town south africa. the deal will make marriott the largest hotel company in africa.

and joining us now is arne sorenson. good to see you again, arne. >> good morning. >> saw you a couple of weeks ago. this is interesting news. you're going to manage these hotels. will you actually own any of them? and it's sub-saharan. >> about 80 of those are in south africa. it's the dominant brand, but across six other african countries, as well. we'll be picking up the brands and franchise business, but we won't own any of the real estate. >> i read what one of your -- some of the other people in the business. it's -- there's some risk but the opportunity cannot be ignored. is that fair to say? is that the way? i mean, it's volatile. but if you're out -- if you're not there, you know, you can't play, right? >> well, africa's a really inspiring story these days.

i think 7 of the 10 largest growing economy outside of asia are in sub-saharan africa for the first time since independence swept across the continent 50 years ago. you've got governments being formed with quality. you've got a middle class that's growing dramatically. and you see both inner regional travel growing overwhelmingly year-over-year inbound and outbound travel. we think u.s. visits to africa are up 4 to 5%. that spells opportunity for us. >> yeah. who else is operating there? starwood is there. >> well, nobody's there in real force. a core of the french company is the current biggest lodging company in sub-saharan africa as a whole. we think with -- kenya, nigeria, none open yet on our core brands. but as those open and we add to

the other hotels we've got in north africa, we think will be biggest and significantly larger than anyone else from around the world. >> just describe what kind of hotels are we talking. >> they've got three brands, ten hotels beautiful. they've got a couple which are boutique lifestyle hotels. when i was there last, i went to cape town, of course, but also a place in the middle of interior of south africa. that hotel is sort of a three-star hotel. been there for decades. you get to the other cities and you get to sort of a full service courtyard, i think would be the best way to think about it for an american traveler.

it has to have meeting space, food and beverage because it's serving a government meetings, it's serving travelers. it needs to really provide a food solution as well as a sleep solution. but it's really well geared to the market. >> i notice there's a hotel hilton. what's going to happen to that? >> well, that's in the town of hilton south africa. it has nothing to do with our competitor brand. >> you're going to have to change the name or not? >> can you even say that word? let me see you say it. >> we're really proud to have a marriott hotel in hilton, south africa. >> wow. i didn't know that, wow, that's a first. arne, you must -- are they local people that are going to run these places? isn't the infrastructure challenging at times? and are the suppliers consistently able to supply things that you need with the quality that -- >> well, that's one of the reasons we were really attracted

to this deal. as i said, we have maybe a dozen hotels or so that are signed and under construction. but we really have no substantial expertise on the ground there. we've got our real estate partners who obviously are developing these. here's a company that's been in hotel operations for 30 years. staffed entirely with south africans. and we could pick up what we think to be the best team in africa to essentially run not only their business, which we'll be acquiring but to run the business that we add as we grow throughout the continent. and deal with the kinds of issues we've talked about. consistency of power generation or food supplies to the hotel. we found in a number of other countries, it can take a year or two to get hotels constructed and built. and that's by and large about

logistic issues. having this team will be great for us. >> i think it was kfc or something and they were a sub-saharan country. so the currency weakened and they couldn't afford what chicken cost from the neighboring country and the quality wasn't always what you would hope it would be. right? >> well, and working with local supply is both necessary and it's also fun to be part of. one of the issues they've got because the logistics issue is too much of the food supply, for example, rots in the field or is spoiled before it gets to market. and so by working directly with the folks who are producing, hopefully near the hotels that we'll be operating, we think we can both deliver great quality to our hotels and be involved in the communities in the way we like to be. >> where else. this is a frontier market. are there other frontier markets where you're going to play? >> well, frontier market, your

phrase, i understand what you mean by that. it's obviously the developing world. i think when you look across the world, we've got a hotel. much closer to home here in the united states. but it's a market which is still struggling to come back from the disaster that they've faced. and in many respects, presents some of the same kinds of challenges. ironically, those are often markets in which the need for the hotel is greatest because you've got people coming in and relatively few hotel rooms. and the quality of the jobs we're offering are spectacular, folks. and to be able to arrive in those communities and welcome visitors coming in but also work with the folks there is one of the things that turns off in the business. >> in the former soviet union, you're everywhere, i guess, at this point, right? >> talk about the former soviet

union, we opened a ritz carlton in kazakhstan last week. it is not a frontier market, though. this is a place that is fabulous. great business. >> have you been there? >> i didn't go to this open. i was there about six or seven years ago. >> did you have a good restaurant there if you decide to take a plunge? what's there? why would i go? >> kazakhstan's got oil for one thing. but it's part of the former soviet union, though, it's very close to india. if you go straight north from delhi, go over the himalayas, you'll get to kazakhstan. and they're great people and great place. there's good skiing, as well. >> oh, there is? >> yeah. >> i've been to el monte in california. i don't want to visit again. i knew it pretty well. anyway, we appreciate it. next time we'll talk about -- just two weeks ago we'll take over the state of the industry.

we want to talk about your investment here and best of luck, you can't, you've got to -- well, andrew has been there and apparently you had animals drinking water that were 5 feet from your room. floor to ceiling. >> awesome. >> you've got to get a place like that, arne. >> we've got a few in this portfolio. south africa or east africa. >> up in kenya and tanzania, spectacular. >> he has slept in a tunnel in vietnam, i think. haven't you? >> i did not sleep in the tunnel, i went in the tunnel. >> you put a futon down and -- >> you know i love those. >> you can't get any room service. >> but we have to get a marriott there. back out to the baron investing conference. becky is there and joined by the c.o.o. of private equity power house carlisle. take a look at the futures ahead of today's jobs report as we go to a break. dow jones looks like it'll open up 27 points higher. vo: two years of grad school.

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welcome back, everyone. and this morning, we have glenn youngkin, the chief operating officer of the carlisle group. he joins me with the top three areas they're deploying capital. our guest hosts, ron baron who also owns this stock. thanks for being here this morning. >> thanks for being here.

>> it's a little staggering when you realize carlisle group has $185 billion you're trying to invest and go around the globe. it's got to get harder and harder to find great places. is it tougher to continue growing like that? >> well, the good thing, becky, we don't have to deploy all $185 billion at one time. and we tend to invest about $8 billion or $9 billion of new equity every year. and that's still an awful lot. but across our platform in the 20 countries we're in, we have a great infrastructure to do it. i have to say the investment environment is not easy. and rising equity prices in the united states and kind of mundane growth has made it tough to find really attractive things to do. but we have three big areas we're spending time with around the world. first is europe. everyone has hated europe the last few years, and yet, there's a number of really, really wonderful companies that have great growth rates in europe today that we've been able to invest in.

>> like what? >> so over the last year, we've deployed $1.3 billion into european companies. and these are mundane companies. packaging businesses, companies that manufacture motors. and those businesses sound pretty dull, but when you have a global customer base and you have really good management, then what ends up happening is the company's perform. and we've been able to buy them at six and seven times ebitda. and so when we think we can buy good companies at six to seven times ebitda, we jump on it. >> what are a couple of the names? >> morelli motors in italy. a wonderful manufacturer of small engines. and morelli has been a quick-growing company and the most interesting thing about morelli is their growth ambitions are global. and our global platform can help them do it. >> what about the ecb cutting rates yesterday? that was a surprise rate cut. >> surprise rate cut, but underpins the fact that the future of europe is still uncertain. so we often say that the economic environment and the

investment environment are quite different. and where the rate cut might signal some lack of confidence in the near term, we can find strong companies with great management that we think have great long-term prospects at good prices, it's a good time to invest. >> part of the reason the ecb rate cut came was because of inflation being so low and concerns about a deflationary environment. i mean, you're not worried about that when you look around. are there certain countries to steer clear of? >> no, well, to say we're not worried about it might be an overstatement. but, again, we're trying to find specific companies. for example, over the last five or so years, the ecb has not grown. but our portfolio has been able to grow its earnings at 15% in europe. it's what you invest in and what you do with it as opposed to investing in the macro economy. >> let's talk about energy. another area that you definitely like. >> absolutely. the global energy markets today we think are one of the most attractive places to invest.

and it's really driven by the fact that today's energy market is not your father's energy market. what we're -- today what's driving the energy investment opportunity is not finding hydrocarbons in the ground but actually producing them, transporting them, refining them and distributing them. and as a result, the opportunity to deploy a lot of capital around the world is great. there's an expectation that $37 trillion of capital spending is going to be required over the next 35 years in this sector. >> wow. >> and that's a great opportunity for private equity. >> very quickly, emerging markets. >> yeah, emerging markets have been an area that have seen a lot of ups and downs over the course of the last few years. but the emerging market thesis is still very much intact. and it's underpinned by the fact that this consumer that everybody talks about is emerging. and, in fact, short-terms ups and downs in exchange rates and

stock markets, those aren't things we really pay attention to. we're really focused on, is that emerging consumer doing what everybody expects them to do? and what we're seeing specifically, china is a great example. we've been able to acquire four companies in the last year at a little over eight times ebitda that have top line growth rates of 35%. these companies focus on that emerging market consumer and so are able to find great companies with great growth at reasonable prices. and, again, it's times when the world seems to think things aren't so great, we're able to find good companies and good prices. >> and, ron, the reason you are attracted to carlye. >> when it became public in the first place a year and a half ago? >> absolutely. >> as a result of that, they came public at $22 a share and there was very little demand for it and fell from 22 to 21 and we bought 4 million shares. and the reason we did, we

thought it was worth $60 when it became public at $20. >> glenn, thank you very much for joining us today and ron, thank you for hosting us here at the baron investment conference. >> thank you. coming up, we'll talk about jobs friday and more on twitter. all that and a lot more when "squawk" returns in a moment. 0 that's a good thing, but it doesn't cover everything. only about 80% of your part b medical expenses. the rest is up to you. so consider an aarp medicare supplement insurance plan,

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the government shutdown made you wait an extra week but the october jobs report is finally here. employment expected to take a hit from the government shutdown, so don't be surprised by a temporary drop in payrolls. >> our expert jobs panel is here to break down the economy the fed and the markets. the third hour of "squawk box" starts right now. welcome back to "squawk box" here on cnbc first in business worldwide. i'm joe kernan along andrew ross sorkin. becky quick is at the baron investment conference. the great barons of --

>> or the barons, robert barons, which we have again currently on wall street. we are counting up to the 8:30 a.m., some people do and the october jobs report. it was delayed by the government shutdown. there's our clock. you can see it, 8:30, expect the shutdown to take a toll this month on the employment numbers. in fact, it could be the worst of the year predictinging october nonfarm at 120,000. you could see a tick up of .2%. could be re -- our panel of experts in a minute. but whenever you're going further away from the numbers the fed needs. >> yep. >> to exit. >> just means. >> the policy, it's -- >> that's what you do, right? >> yeah, you main line some more. >> i think you have to.

>> it's not a good thing. >> you don't want to give back gains you've made. people are worried about that number anyway. whether it's the real number to use for the unemployment situation with all the part-timers and much higher levels. we've got a couple stories we've got to bring you, as well this morning. a super typhoon slamming into the philippines overnight. hundreds of flights canceled. when the typhoon made landfall, it had sustained winds of nearly 150 miles per hour with gusts of up to 170 miles per hour. you're looking at images of that now. and makes it the strongest typhoon of the year. we're going to monitor the storm and bring you updates throughout the day. twitter now entering its second day as a public company. rising 73% from the ipo price yesterday. twitted entered thursday's trading with a market cap. first day of trading on stock exchange went smoothly compared to facebook's ipo when it debuted on the nasdaq.

and we're going to talk to john steinberg in a few minutes. one of the things you always wonder when you get a pop like that. if you're twitter, do you say, wow, i left so much money on the table and i missed this up, or do you say this is how it's supposed to be? >> in my view, you keep the demand really strong and supply low. and how much of the company did they sell? >> $1.8 billion. >> how much is that? >> tintiny, tiny. >> and the rest of the shares are valued at a higher level. >> yep. >> you want the pop to get the -- so l people in the ipo. >> always the debate. >> no one's going to be belly aching about twitter like they did with facebook. i mean, that went on a year of belly aching. zuckerberg, i think it affected his life in all the answers. nobody's going to say this didn't work. except for john steinberg who said it was going to open at $30. >> we can challenge him on that. in the meantime, let's take a

quick check of the markets. u.s. equity futures after a rough day yesterday. despite twitter going up, probably the only one in the green. dow looks like it'll open up this morning about 15 points higher, though, it was much higher in the premarket earlier today. nasdaq looks like it would open up about nine points higher in the s&p 500 looking like it'll open up about three points higher. mcdonald's releasing same-store sales. overall comps rising .5%. up .2%, which is below estimates and analysts looking for an increase of .5%. results in europe, though, topped consensus. known as apmea, you can say it however you like and that did miss the market. >> and we're counting down to the october jobs. our guest host, chief market analyst at the lindsey group. also with us this morning.

were you in washington, zandi? >> i'm in d.c. you can see behind me. in the capital. >> normally you're here. >> i know. i miss you guys. there's important stuff going on down here. >> and then we have senior fellow and director of economic policy at the american enterprise institute. and mark zandi again. oh, no, no, that's austan goolsbee. he's also a former chairman of the council of economic adviser in the obama administration. welcome one, welcome all. we like the bad news, i guess, most, austan. and you've been the one that's been kind of pessimistic all along about the jobs picture. i don't want to put words in your mouth. are you below 120 today? >> i'm still below 120, i think it's going to go down for sure. people, i think, were a bit

freaking out in october because we got in another one of these dramatic drops in consumer confidence rooted in. wait, what do you mean we could default? and i think we'll be digging out of that for -- >> and will we go -- we just made the point that with the fed having these clear cut numbers for when they exit, it's not -- it's not good news when the unemployment rate is heading in the direction which is opposite from where we need to get for the fed to exit. >> yeah, look, that would be true no matter what it was. if the unemployment rate's going the wrong way and the job creation's allow, i don't think that's a good sign. and it's just an indicator. the fed tried to lay out kind of a framework of here's how we're thinking about it. and we want to get out of these positions as quick as we can as soon as the economy can handle it. if we get numbers like this on a repeated basis, the economy cannot -- >> if we go to 7.4, do we go right back to 7.2 and 7.1 the

month after? >> i think so so. we're at 7.2, we go to 7.5. there were 450,000 furloughed government workers and private sector workers that were furloughed. and that'll all show up in unemployment. i think it's 7.5. but they all came back to work and said we go back down to 7.2 next month. >> you're with the aei. you represent, you know, all those awful republicans. this is all your fault. what do you -- what -- exactly. all the things you did with your friends. i hope you feel good about yourself today. we're going to have this awful number. >> yeah, and it's exactly 100% the republicans fault. i think that for sure 120 is the sweet spot for the estimate, not so sweet spot. we are on a down trend before october and as austan said, there's a lot of freaky stuff going on. i think that the unemployment rate has to go up because of the way they did the payroll survey. they ask people were you working not being paid. they'll say, no, we're not

working. i think the nuance, where is the decline, where do the jobs not happen? and this is where my guys might be different from austan's guys. there's the insurance shutdown that would freak out small employers and the government shutdown. and i think we might see signs of both in the data today. >> kevin, there are insane -- some stupid people on the far side of both ends of the political spectrum, but others that like to use -- i was only kidding. that was sarcasm about it being all one party's fault. i want to be on the record. >> oh, sure. >> saying that was hyperbole. peter, you understood what i was saying. because there's one side that would put that forth as fact. >> plenty of fingers can be pointed. >> that would be the american people's side, joe. >> all right. well, we know what party is on austan's side. where are you on this number? >> i'm going to say a little better, 135, 140-ish. the component actually ticked

up. so even 140, even if we got 150, 160, it's still terrible, still mediocre. and it reflects the corner the fed is in. what they're doing isn't translating into jobs because you can't print jobs, unfortunately. >> where a lot of people differ is that one side really points to uncertainty whenever the government is shut down. the other side points to the uncertainty of the last five years based on tax policy, regulatory policy, health care policy and everything else. and this is the age old argument we're going to have again and again and again as to why it's a tepid recovery. >> and i want to add to that. the western world is still suffocating from all this debt. here you have a crisis in '08/'09 when the goal was to deleverage. >> we made that point earlier. the public sector. that's not as bad as the private sector. >> but you take the corporate sector and that's one side of the balance sheet. corporate debt is at record

highs. so this belief that we've delevered, it's not really true to the extent that people think in the private sector. globally, debt is way too high and that's a major overhang. >> who wants to talk. >> no -- i think it's much too pessimistic, corporate debt service, the interest coverage ratio, the portion of cash flow going to servicing debt, that's pretty low, about as low as it's been. and businesses have locked in these low rates. change in market rates about as low as it's been, about 20%. the businesses are fantastic financial shape. american companies couldn't be better. >> but the point about the public sector having all the debt now. is that something to worry about? you saw the ecb yesterday, saying it's much worse in total leverage than it even was in 2008. >> well, you know, i think we have a debt to gdp ratio that's 70% to 75% that's double what it was before the recession. >> that doesn't count the fed. what about all the central banks

and all that sort of -- you don't really -- >> no and i don't think that's a meaningful reason for concern. but 75% is not good. i'd like to get that down. but i don't think that's cataclysmic. i think we can live with it in, you know, we'll have to address it at some point. we don't have to address it now. >> we'll go to a break. kevin, will you answer what you think about that and who else -- and austan, you can eventually answer too. that's really confusing now with you guys right above -- above and below each other. our guests are going to be sticking around until the jobs number's out. we'll have much more from them in a moment. and we've got to go, but kurt worked at ge as a publicity guy. a public relations guy before he did all that other -- >> i loved him. >> i did too. slaughter house 5. >> he was a ge publicist. anyway. we're going to go back to becky. >> becky's back in lincoln

center. becky. >> that's right, guys. thank you. when we come back, that delayed jobs report is less than 20 minutes away. we'll find out the impact the government shutdown will have on the employment numbers. also, twitter, those shares soaring in the company's trading debut. we spoke to john steinberg yesterday before the ipo. up next, his reaction to twitter's first day of trading. "squawk box" will be right back. clients are always learning more to make their money do more. (ann) to help me plan my next move, i take scottrade's free, in-branch seminars... plus, their live webinars. i use daily market commentary to improve my strategy. and my local scottrade office guides my learning every step of the way. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) ranked highest in investor satisfaction with self-directed services by j.d. power and associates. customer erin swenson ordebut they didn't fit.line customer's not happy, i'm not happy. sales go down, i'm not happy.

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the music is perfect for this next segment. welcome back to "squawk box." twitter's stock is soaring 73% in the first day of trading on the new york stock exchange. joining us to talk more about it this morning after the big debut john steinberg, buzzfeed president and c.o.o. we talked to him yesterday. and, john, let's start with this, when we had the conversation yesterday, you said $30. >> you said for sure. you said for sure. >> i said open at $30. i didn't say it was necessarily going to stay at $30. >> you said opened at $30. you were off -- if somebody's off by 50%. but you told us definitively like you knew something, john. and i changed what i was saying.

i actually changed what i was thinking about how much thought there was. you missed it by 50%. >> i missed the open price. also, if you look at it now. >> it never traded at 30. >> it's really expensive. it's e.v. to revenue is double the next closest peer. if you look at 14 or 15, it's really super expensive. >> you were using the private valuation and somehow you indicated. you knew something no one else did and you didn't know anything. >> i was hearing from people upstairs and trading floors. >> don't talk to them again or don't talk to us next time. >> all right. all right. fine. >> here's the question. if you are jack or dick or any of the guys at twitter, are you saying, boy, i made a mistake, i left so much money on the table? or are you saying, you know what, this is a win, we only put out a little bit of stock and the whole value of the company is that much higher? >> i'm going to agree with joe to get him off my back on this. >> i would not have said it. but i actually believed you and then you know when i was talking to cramer, i said --

>> i've been right on cramer. i'm allowed to be wrong once. >> we love you, john. >> but guys, i think you're happy. no belly aching, stock options are essential to recruiting and keeping talent happy. a depressed stock price makes everybody lose confidence. whether it's marketers that can buy advertising or people who can do partnerships. i think they're happy. they left a bunch of money on the table. it's much better than the year facebook went through. >> the point we made is that the rest of the company is now valued at 44. so, you know, this is only -- how much was it? 10% or something? 12%, john? >> yeah, i think it was around that. maybe a little bit less. >> now the whole company. i would do it that way. keep the supply low, let the demand run up the price to where whole company's worth -- >> a couple other points. i think where we're at now is the next big thing they're going to do. where they run twitter ads around the web. the video product, beating on revenue so the consensus of the

nonunderwriters is basically 1.7 billion for 2015. they basically now have to get the next thing to justify where the price is now. >> that's the issue, john. >> now they have to grow into this price. >> absolutely. >> and the pressure on them is going to be the fact that if you're saying the stock is expensive over the next six months to a year, how much harder is it to execute against that sort of new bar? >> right. and what's amazing is we looked at all the price targets people have put on this. when 40 hit the tape from -- i think it was cvt or crt. everyone has prices, the upper ends in the mid-40s. now we're at everybody's upper ends. maybe they can go and raise their targets again as they typically do. but two days ago, this was the upper end of what everybody was thinking. >> there were two publicly traded funds that owned private shares in this company before the open. >> yeah. >> after the open, their funds -- the value of their funds actually went down. >> i don't understand why that would possibly -- i mean, that, i don't know anything about that. i do know and had heard people

were buying and selling $15 billion, $16 billion. those people are very happy now because assuming that the price on the small float applies to their shares and it holds up beyond their lockouts -- lock-ups. they'll be able to get out on a higher prices. but anybody that bought this privately right now can feel comfortable for the time being. >> how about this, john, facebook, people throw that into one of the reasons the individual investor is still disillusioned. and the mini crash and the notion that the little guy really doesn't stand a chance. with facebook, the little guy that was lucky enough to get in, he lost money on the ipo. in this case, the little guy didn't get any on the ipo, right? really. and so he had to buy it 45. so he didn't get any of the upside from 26 to -- why should the little guy feel any better in this case? i think the little guy still feels like he can't -- >> look, the stock traded up to 50 and closed at 45. i'm hoping little guys didn't get, you know, whip sawed in

that process. >> andrew says they're going to eventually get it because it's mutual funds and hedge funds. >> i also think we're going to have dips over the next two quarters. cramer two days ago said $20 billion was where he was comfortable. that was to my mind where i could get comfortable, as well. they're going to have a -- >> what price is that, john? >> that would have been -- basically $31 billion. a 30% discount. 30% off of 45. >> all right. and by the way, the two funds i was talking about. gsv capital corp., those shares went down even though they had big stakes in this thing. >> doesn't make any sense to me. >> i don't know, thank you for joining us. and just so you know, if he didn't give you a hard time, that would mean he didn't like you. >> now i feel much better. >> think about it. >> yesterday was about the android penetration, which since i didn't know that was like a -- what is an android? some type of software for google? >> you know what it is, joe.

it's google's operating system. >> it's a robot. >> the most popular operating system in the world. that's what android is. >> and we were discussing market penetration. >> exactly. i got confused. >> that does not compute. >> we'll see you soon. thank you. >> some day, though. that may be. coming up, we are minutes away from 8:30 a.m. on the east coast. and the october employment report. up next, final prediction from our panel and they're going to stick around and break down the numbers. and at 8:40, the co-ceo of whole foods will join us and talk about the latest quarter. we might even throw a question about transfats to him. mine was earned orbiting the moon in 1971.

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welcome back to "squawk box," we're minutes away now from the october jobs report. delay, delay, delay. we're going to get to rick santelli and steve liesman for final predictions. gentlemen, let's start with you, rick. what's your number? >> 101,000. >> oh, you're going even lower than consensus. >> i don't know. >> consensus right now is about 120, though some of our "squawk" panelists are a little more all over the map. >> boy, you said a mouthful there.

>> steve, where are you? >> i like 141,000. >> oh. why? >> just a touch higher than consensus. i don't think the federal stuff shows up in the payroll numbers, i think it shows up in the unemployment rate. and the private sector indicators i've seen have not been that bad. i don't know what the knock on effect of the federal government shutdown has been. but the ism numbers are pretty good, the jobless claims have been polluted by the california computer problem. but if that's the case and a 335 or 340 average over the course of the four weeks is not too bad. plus, my thinking here is that all of the risk is to the up side. the market has completely baked in a negative number. i'm most interested in the september revisions. >> real quick, because we've got to go. is that right? if we have a negative number -- >> not negative. >> a bad number? you think the market's already baked that in we go up from here? >> well, i think in stocks, you

know, bad is good and good is bad. but, you know, outside of that childish view of the world given to us by the fed, i would look at the fixed income. i think that'll get it right. a weak number, rates will move lower. strong number, rates will move up. there's a strong sense of reality there. >> hasn't the fixed income market baked in all of this stimulus from the federal reserve? that's what the surveys show. >> well, i don't know what your survey shows, but that's not what i see in the market. i think what's baked in is the cave-in on the taper. of course that had to show up. but we are still, you know, 13, 14 basis points higher than fed wednesday's statement. >> we're going to sneak in a quick break. coming up, the government shutdown forced you to wait an extra week for the october employment report. now it's just a couple of minutes away. we'll be back with the number and instant reaction from the panel as we head to our break. take a look at instant equity futures. ♪

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welcome back, we're seconds

away from the employment report for october. ahead of the numbers, u.s. equity futures are up 24 after a weak session. most people we've talked to are at like 120 or so but they do see the 7.2% rate moving up some to 7.4%. we even heard 7.5%. hampton pearson with the numbers from the labor department. hampton? >> up 204,000. october nonfarm payrolls increased by 204,000 jobs, the unemployment rate is 7.3%. they -- much higher than the consensus. we also had significant juch wa upward revisions. a net increase of 60,000 jobs for august and september, above what had been previously reported. the other headline in this particular report, october private sector job growth plus 212,000. i'll get to that in a moment. the impact of the government shutdown. here's the benchmarks as we have them from the labor department. in the household survey, there

was an increase of 448,000 persons who reported being on temporary layoff. at the same time, the labor department tells us 223,000 federal workers were on temporary layoff but that number is not seasonally adjusted. it's a difference in methodology between the surveys that impacts the numbers in the household survey. those persons would have been counted as unemployed or temporary layoff. whether or not they got paid in the establishment survey, basically laid off government workers were counted as employed because with the legislation that ended the shutdown, they knew they were going to get back pay. back to that headline number of october, increase of 212,000 in the private sector, leisure and hospitality up 53,000. retail trade, plus 44,000, professional and technical services, 21,000, manufacturing up 19,000, health care plus 15,000 as expected in october, the federal sector lost 12,000

jobs. back to you guys and a lot to chew on. >> okay. hampton, watch this. let's get back to our panel. okay, kevin. watch this. i know that rush limbaugh always likes to take things out of context and then rail for ten minutes about things that people didn't even mean, which he does, he does do. he'll use the last thing where i was blaming republicans for the shutdown. now watch this, well, it looks like no harm, no foul with the shutdown and obama care as we now know did stink and probably should have been delayed. now i'm saying the republicans are right, kevin, so i'm throwing you a bone. >> yeah, it's absolutely amazing to see a number this large. we're all stunned. this is 100,000 more than any of us expected. we'll see in the fullness of time whether this thing gets revised away. but together with the gdp report, it seems the trajectory of the economy is a lot more positive than any of us expected. >> and zandi, i had already written it down your 175 you

said we'd been averaging for two years, i had written it down it was downgraded to 150. we revised some of the ones we were using for that number. is it still 175? >> i find this bizarre. i would be surprised if this doesn't get revised away to some degree. >> down? >> down. yeah. feels like to me looking at the breath plethora of data, even the gdp data. >> how do you say that, mark? >> are you disappointed you can't be mad at the republicans? >> no, no, no. even gdp growth year-over-year is 1.7%. that's not consistent with 175, now 200,000. >> look at the ten-year and the equities. that is sick -- this is sick. >> hey, uncle joe, who called that one? >> you did. and that is sick these guys -- >> thank you, thank you. if you like your 204,000 number, you can keep it, right? >> what? >> yeah.

that's what the stock market's saying. it's still about the fed. that's sad they can't see this and say how great is this for the economy and bid the market up. >> i don't know, maybe they should close the government every other week if we get data like this. >> that's what i was going to say. >> likely to have another shutdown. >> austin, we still may delay obama care. they were right about that, right? >> just keep the government closed for a while. >> look, all of the -- all of the problems and the shutdown seems to have done good for the economy according to these measures. maybe you should be rooting for one in january. >> good news/bad news thing. look at futures. >> here's what i don't get, mark. zandi, i don't understand how you say the data's not consistent with this. we had a strong series of isms, we had a 2.8% gdp number, which by the way this data is perfectly consistent with. the shutdown may have had an effect, maybe not. the fact the economy was not

slowing the way we thought. i'm really attentive to the september and even august revisions, by the way, i'm looking at a number here, 238 for august, 163 for september. if there was a slowdown, it was only minor, i think. look, we didn't know if the shutdown -- i expected it would. it doesn't appear to have retail hired. and what numbers are you looking at that tell you the economy was really weak and this number doesn't go along with it? >> quick assignment, what was hours work. >> ticked down to 34.4% from 35%. >> this never happens. >> it happens. mark and i have very differences of opinion. i just don't see the inconsistency, that's why i was sort of on the upside of this number. not nearly enough on the upside, i agree. but the idea that the economy was weakening was never there in the data i saw. i don't understand this. we got the news, hold up, the

futures went down. >> down 50. now they're back up. >> now they're coming back, nasdaq is -- explain that, peter. >> 271 on the -- >> 270 on the -- 2-7-0! >> interest rates are the most important thing here, the last time we got north of 2.5%, the housing market slowed down. so a rise in interest rates is -- and it could be a road block to a further recovery in the economy because the economy's become dependent on higher interest rates. >> right. >> so the fed in a sense, in my opinion has created speed bumps to recovery if interest rates head higher. >> that's the problem with being addicted to heroin. >> exactly. >> when you get off the heroin, it's not even good news. >> the market was completely priced in for negative news. it was priced in for a forever fed. >> supposedly not. >> and this is perfectly in line -- >> back to march, for sure. >> right. now we're back to a place where the market's thinking about less

qe, less stimulus. a ten-point rise in the ten-year. >> how can you make those comments? >> pardon? >> does the market send you a memo, uncle steve, really? >> no, but if -- >> how can you speak about it in the third person? i don't get it. >> are you saying the market -- are you saying the market did not agree? what are you talking about? >> there's nothing built in. the equities, they're a tin cup. they just want more, you kno know, -- >> the idea that the market was not priced in for a full year of kwan at a timive easing that in our last fed survey did not increase the amount of qe by $300 billion. that's exactly what it did. it pushed ahead the taper. and now it's a simple process of the market pulling it back. i don't see an issue here. >> i don't think you can survey people that wear straight jackets. >> here we are seeing one of the problems when it's all built up on the fed staying in and you get good news and you can't embrace the good news? >> i don't see a problem with it.

270 on the ten-year is not something that's going to derate the u.s. economy. and the market has got nothing -- can we go back and take a longer look -- >> steve! 2.70 is about where the -- >> i agree with you there. i agree with you there. i think the fed should've used the opportunity in september to taper, i think it missed that opportunity. i think it was probably appropriately spooked by what was going to happen in washington. but the 270 on the ten-year. >> nothing happened. we got 2.07. >> but the uncertainty was what -- >> something quickly about the housing market. 100-basis point increase sent refis down 70%. the mortgage applications fell to the lowest level of the year. if we now start to see a rise again in mortgage rates, what's that going to do to the specific area of the economy? >> you know the answer to that, as well. part of the answer is 204,000 more people working is 204,000

more people who have a better chance of getting a mortgage than they did if they were unemployed. there's a tradeoff there and ten basis points 270, can we look at the long-term chart of the dow? we've been nothing but straight up. >> let me ask one more question to austan. you need to answer me seriously -- you've got to give me an honest answer here. are you happy that jobs were much better than expected? or are you disappointed that you can't take back the house now in 2014? >> no, no, i'm tremendously happy. >> really? >> all i care about -- >> nancy pelosi's not happy, i bet you. >> she may not be happy but i'm very happy. >> now you can tell the truth. >> i wonder if the market is discounting -- this may be a noisy number. one reason might be reacting -- >> your avatar might be right that maybe this gets revised. who knows. but it's shocking. >> right. >> it's shocking, the best number we've had in the last four months. >> here's the other perspective

on all of this. the other perspective on all of this. you extract from the months, volatility monthly day up and down and all around. in the last three years we're still at 175. >> you should be happy, zandi. you could say it's the $800 billion stimulus you threw away. >> august was 2.38. >> was 2.38. you've done 163, 204. >> okay. it's 1.75, you've been consistent on that. >> what about adp hit 1.30. >> oh, that's why, that's why it's going to calm down. >> let's talk about that. >> that's why he thinks it's not real. okay. i forgot about that. you're right. rick, steve, mark, kevin, austan, did i forget anyone? andrew, thank you. >> it's been lovely being here. i appreciate it. thank you very much. coming up --

shares of whole foods fell sharply after the company lowered guidance and reported quarterly revenue that missed expectations. up next, the co-ceo walter robb. going to talk about plans for expansion. and i've got to talk to him about all that whole paychex stuff. don't miss "squawk box" on tuesday, kicking off the dealbook conference in new york city. among the headliners, dan loeb and many others. that starts tuesday, 6:00 a.m. eastern time. back in a moment. at farmers, we make you smarter about insurance. because what you don't know, can hurt you. what if you didn't know that posting your travel plans online may attract burglars? [woman] off to hawaii! what if you didn't know that as the price of gold rises, so should the coverage on your jewelry? [prospector] ahh! what if you didn't know that kitty litter can help you out of a slippery situation? the more you know, the better you can plan for what's ahead. talk to farmers and get smarter about your insurance. ♪ we are farmers bum - pa - dum, bum - bum - bum - bum♪

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welcome back to "squawk box." whole foods announced record fourth quarter and year end results. that weighing heavily on the stock. joining us now to talk about, walter robb, co-ceo of whole foods market. good morning to you. >> good morning to you. >> we have. i don't know if we can show it. we have a map of how fast you guys have been growing. it's quite remarkable. it's pretty amazing. also to me represents sort of the opportunity for you in terms of your growth. in terms of the number of new stories you think you're going to be adding over the next 12 and 24 months, what's it like? >> we opened 12 stores this last quarter. on earnings day wednesday, we opened two stores, one in castro and san francisco and one in northwest side of chicago park ridge. so we've got 32 that we did this past year. we've got 35 to 38 next year and

i think we'd be knocking over 40 the following year. it's -- they're coming out faster than ever. >> what does your store say about the american consumer right now? the whole food market really shifting toward an emphasis on fresh, healthy foods. that's the idea out there. people really interested in the quality of the food. >> not fracking. >> none in the dakotas at all. frackers don't need any whole foods? >> i don't see a reason we can't do a store out there. >> 3% unemployment, 2% unemployment. that might be one reason to open one up up there. >> great gdp growth, as well. >> but in terms of the markets you can go into and specifically the locations, how upscale does it have to be, and in terms of your growth, can you go farther down scale to some degree. >> yeah, i think the opportunity for whole foods to grow is very large. we've looked at -- we've mapped up, talked publicly about 1,000 stores in the united states.

and that's clear. we've done the sort of mapping in the united states. it takes us to all the states, takes us to other countries, as well. so there's -- it's pretty wide open in terms of markets. we can serve down to msas of 50,000 or more. >> one other issue that always gets raised is organic, which is a big part of your business. >> yeah. >> and whether, actually, you can produce enough quote, unquote, organic food to actually supply and supply what seems like a huge demand by the public. >> you know, the demand for organic continues to grow at double digit rates, the supplies also grow. the rules are clear with the law and for us we're going to have to double what we buy in the next five years to support the store growth. and we're making the appropriate plans to make sure we have those things in place. >> and is organic really organic then? >> it really is. the federal law since 1990, there's very clear rules about that and third party certify, the customer can be clear that when they buy that organic label, that's what they're

getting. >> do you have any genetic modified stuff? does that make sense not to have any if like five years from now if it's really, really good and really effective? >> well, again, our commitment is to transparency and labeling so customers can make the choice. >> so you would -- you're not saying no, then? >> that's right. >> could i find a transfat molecule? >> that's where i was going to go. >> in your store if i was looking right now. could i find a single molecule in your store? >> no, you couldn't. >> i'm not saying -- i may want to find one. if i want to eat a cinnamon roll with a transfat, i want to be able to eat one. >> we'll get you a delicious cinnamon roll without the transfats. >> i had tomato soup yesterday that was the healthy kind and i had to spit it out. no, i want transfats occasionally. >> do you have a view on that, by the way, walter? i wonder if you have a broader view about that. >> whole foods is the leader in quality standards.

we have the highest in the industry and 100% transparent. and my view is as time progresses, more and more of these sorts of issues are going to come out where you'll see the linkage and the quality of the food. whether individual customers value that or what choices they're going to make, that's a matter for the individual customer. that's my view. >> one last one for you. as other super market chains and other retailers move into your space and do more and more that looks very similar. because, by the way, i go to supermarkets now that if i didn't look up, i might think i'm in whole foods in certain places. what does that do to your business? >> well, i think, you know, i think it's frothy out there. lots of competition that's exciting, a dynamic market. but i think indication that the market continues to grow. and we're the leaders, and i think we expect to continue to be the leaders in that space. >> okay. >> is john still there? is he? is mackey? >> he's right down the hall. we're here together. >> walter, are you philosophically with him and

with others? i mean you've read some of the economics. but everybody in the country needs to read what he read. he knows exactly what's going on. any of those. i mean, i love him. >> thank you very much. i'll pass it on to him. if i read them, absolutely. i'm with him every day. >> okay. good. >> all right. positive role for business. >> incentive. capital, i think. coming up, get ready to close out the trading week. that's what we're doing. jim cramer's going to join us next talking about the jobs report, twitter, the stocks, head ahead of the opening bell. and if you're looking for weekend reading, check out the latest edition of "talking squawk blog." joe's european travel plans now that the euro's down and taxing recreational pot. go to squawk@cnbc.com.

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let's get down to the new york stock exchange. jim cramer join us now. i don't know where the market will end up today but i said this before, jim, damn it, if we get a good jobs number, the market shouldn't go down. it's not right. that's where the fed doesn't

realize it's a bad thing to get used to the fed. because then you don't even care if the economy is good. >> how many people come on our network and say the economy is really weak and near death's door, going to be a recession, never going to be any growth. countries would kill for this job growth we just had. it's okay. it came in the face of a shut down. you're in trouble for the first three hours of trading. that's when you're in trouble. >> to look at it as the possibility we get a $10 billion taper sooner than expected and that's why you sell the market? >> 10-year, mortgage rates. people will sell housing but they've been selling housing all years. those stocks are all down for the year, not really exceptional. >> be addicted to the fed is like staying addicted to a

10-year. >> i want to be addicted to up side surprises. a lot of our companies are pulling that off. obviously some companies you're going to say are there going to smash the commodities, is the fed going to tighten? the commodities last for about the first four tightenings. >> why did the market sell off after twitter -- was it to topee? >> i heard that. there was a rumor we'd have a strong job report. a lot of people were freaking out because of the dollar. it was freak out as usual, joe. >> i think we need before the young people in this country become comfortable with the stock market again, i think we need another ten of these good, really exciting ipos that open that show that you can do okay in the stock market. because right now, people, young people do not think can you make

money in the stock market, do they? >> no. this offering was really well handled. i went to a charity event last nig night. i have not heard people talk about the stock market. i had people say i wish i gotten twitter, i wish i learned you could make so much money like this. this is a real touchstone for people that the stock market can make you money. >> we have been kind of obsessed about the government and everything the public sector is doing. it would be nice to get back and be obsessed with what's going on in american business. >> this dick costolo yesterday, i said this guy has changed the country and you have a chance to make money. i understand the stock is overvalued, no doubt about it and net flerflix is overvalued. i won't say don't buy an overvalued stocks because people made money on overvalued stock.

>> coming up, we'll give the last word to our guest host. and ahead on "squawk on the street," u.s. labor secretary tom perez is going to be joining us. stick around. >> feel the need to talk and text on your phone while flying around the country? now there's a new app that lets you do it when "squawk box" returns. mine was earned orbiting the moon in 1971.

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welcome back to "squawk box." let's get back to our guest host for the last word. give me the good news/bad news scenario. >> it's great we saw this positive jobs number. unfortunately the fed has put markets and the economy in this fantasy land where they created a bubble and bond market that will slowly unwind and markets that extremely dependent on low interest rates, higher interest rates in my opinion unfortunately is kryptonite. >> when you look at the stock market today, we're going down from here? is that what you're trying to suggest? >> if the 10-year bond yield starts to head closer to 3%, it's a major headwind for stocks in the context of a tremendous year. >> we sold them forward on the fed and now when the real economy starts -- >> we've pulled forward a lot of

gains. >> it may not be inflation or all the other dire things they say about the fed but you got to get this out of the way before you can normalize trading. >> and if the taper had started, we'd be in a better place? >> yes. or at least a step there. >> we have to go. thank you for joining us. "squawk on the street" is next. and good friday morning. welcome to "squawk on the street." i'm kelly evans with jim cramer and scott wapner. carl and david are on assignment this morning. the news first. so much for the shutdown. 204,000 jobs, that was the number of jobs the u.s. economy added in october, well above expectations. you throw the revisions in there, look at the private sector figure, it's even higher. futures off on their highs on concerns the fed might scale back its bond buying program sooner rather than later. look at the 10-year note yield. a big move. it's been w